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B of A kills overdraft fees
Bank of America's decision to get rid of overdraft fees on debit purchases sounds like a win for customers based on a rare commodity in the financial sector -- common sense. But is it really?
The bank says starting June 19, customers who try to use their debit cards without enough money in their checking account will simply be declined. More from the New York Times:
"What our customers kept telling me is 'just don't let me spend money that I don't have,' " said Susan Faulkner, the bank's deposit and card product executive, who said the overdraft changes were part of a broader push to build trust among its customers. "We wanted to help them avoid those unexpected overdraft fees."
Keep in mind that two weeks after this policy takes effect, banks will be required to get a customer's permission before enrolling them in a overdraft program. B of A will still offer overdraft protection on checks and automatic payments, with the customer's permission. The bank's decision to eliminate overdraft completely on debit purchases is a bit of a surprise. Consumer groups like the move.
But let's be real. Overdraft fees are a multi-billion dollar business. That revenue has to be collected somewhere else, either through budget cuts or more likely, other fees. This could mean the end of free checking or rewards programs. Consider this:
In the past, a relatively small number of customers generated such enormous fees from overdraft charges and penalties on credit cards that they subsidized free checking and generous rewards programs for the majority of customers.
In the case of overdraft, 93 percent of the fees are generated by just 14 percent of the customers who exceed their balances five times or more a year, according to a 2008 study by the Federal Deposit Insurance Corporation. Three-quarters of customers are not charged overdraft fees at all, the study found.
So the question is: As a customer, do you favor the elimination of overdraft fees, even if it means free checking or other perks go away?
Or is it unfair that a majority of customers will have to make up for the fees that were generated by a minority of customers?
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Let' get real, really. Don't spend money you don't have. We must stop perpetuating this mindset that we can spend money that we do not actually have. This kind of behavior has led to risky trading, credit default swaps and other financial trickery that has only just had the light turned on it and IT STILL benefits those who STILL have all the cards stacked against us. REMEMBER we still have how many unemployed? 12 million? Last count for February another -36,000, and you want to perpetuate the army of those that work for financial institutions who will DO MORE HARM than good for the country? Do not listen to this crap, do not let financial lackeys try to confuse you.
Thank you Frank. You are right. There are alot of things wrong with our current fiancial system and it is clear to me from some of the last comments that they have no clue as to the nature of the problems we face. Not only will future generations suffer, but their morals, health and welfare will continue to sharply decline. Change can come slowly and gradually, or it can come on like gangbusters, which may happen, only time will tell......
I use a small local bank for my checking. The fees are really low, and the checking is free. I mean, they don't even charge me ATM fees for using other banks' ATMs (although the other bank might charge).
How is it that they manage to stay in business? Is it maybe because they don't have executives getting billion-dollar year-end bonuses and salary packages?
I have to say I'm kind of dubious of the claims of a lot of these big banks crying poor.
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